June 26, 2018 TnH Global 1

Royal Caribbean Cruises to purchase 67% stake in Silversea Cruises

‘Crown Jewel’ partnership to strengthen Silversea future and enhance RCL Brand Lineup

Royal Caribbean Cruises Ltd (RCL) represented by TIRUN Travel Marketing in India, announced an agreement to acquire a stake in privately-owned Silversea Cruises.

Silversea is one of the leaders in luxury and expedition cruises and the partnership will bring together two companies with a bold, long-term vision for the global cruise industry.

Under the agreement, Royal Caribbean Cruises will acquire a 66.7% equity stake in Silversea Cruises based on an enterprise value of approximately $2 billion. The purchase price of the equity being acquired is approximately $1 billion. RCL plans to finance the purchase through debt. In addition, Lefebvre will qualify for an estimated contingent consideration of approximately 472,000 RCL shares, payable upon achievement of certain 2019-2020 performance metrics.

The strategic rationale for the partnership includes:

Driving long-term capacity growth in the burgeoning luxury and expedition markets at a much larger scale than what Silversea would achieve independently;

Diversifying Royal Caribbean’s portfolio and increasing its expedition offerings by adding a premiere ultra-luxury brand;

Leveraging the global footprint of the combined companies to generate demand and increase vacation and destination options for the guests of both companies;

Realizing significant synergies related to global market access, supply chain, purchasing power and other economies of scale.

Speaking on the announcement, Ratna Chadha, Chief Executive, TIRUN Travel Marketing, said, “The planned investment by Royal Caribbean Cruises Ltd. in Silversea Cruises is a strategic agreement for both brands and will strengthen their combined leadership in the cruise travel market. The synergies of Silversea and RCL will enable them to together expand the vacation options for guests from India and all over the world, while also creating enhanced revenue opportunities in key growth regions. The move is expected to further broaden the scope of the luxury and expedition cruise industry and is certain to benefit all stakeholders at a global level.”

Silversea, with its intimate, all-suite ships, full spectrum of global cruise offerings sailing to more than 1000 global destinations, and unique luxury expedition vessels, adds a pioneering ultra-luxury brand to RCL’s industry-leading brand lineup. RCL’s largest brand, Royal Caribbean International, is a contemporary brand focused on adventure-seeking families, Celebrity Cruises is a premium brand providing a modern luxury experience to discerning global travelers, and Azamara Club Cruises is a destination immersive brand offering luxury voyages to unique ports. The company also operates the regional TUI Cruises and Pullmantur brands as part of long-term joint ventures.

The closing is expected to be completed later in the year, subject to customary closing conditions and regulatory approvals.

Operationally, the company’s forecast for the third and fourth quarters has remained un-changed, but increases in the market price of fuel and the strength of the dollar are expected to cost the company roughly 25 cents per share. Fortunately, strong close-in demand for core products and better-than-expected performance below the line is expected to drive improved results for the second quarter. These improved results are expected to completely offset the impact of the FX and fuel headwinds in the second half of the year, which allows the company to maintain its guidance for 2018.